THE EXPLOSION OF THE DEBT CRISIS

This section provides sources that explain the origins of Puerto Rico’s 72 billion-dollar debt and the various resolutions that the local and federal governments pursued to alleviate it. In terms of the debt’s origins and legality, the Puerto Rican government’s money mismanagement is discussed, as well as the colonial economic system’s sanction of “vulture” hedge funds to prey on Puerto Rico. Many authors consider the ways in which different solutions are shaped and limited by Puerto Rico’s relationship with the United States. These solutions include filing for bankruptcy, renegotiating the debt, austerity measures, and a transformation of the Island’s political status. The Public Law 7, which allowed the firing of more than 17,000 government employees, was one of the first policies of austerity imposed by the Puerto Rican government to alleviate the economic crisis. A portion of texts in the subsection regarding the unleashing of austerity examines the effects of this Law, including the further exacerbation of the Puerto Rican economy. Eventually, the debt led to the imposition of the Fiscal Oversight Board, whose determinations cannot be challenged by the Puerto Rican government. One subsection explores the PROMESA bill, the Board that it empowered, the members of the Board, and their exorbitant salaries. Furthermore, since Puerto Rico did not have a bankruptcy process in place, Title III under PROMESA represents a quasi-Chapter 9. This section expands on the bondholders’ unwilling negotiation that led to Title III and the consequences of this policy, such as loss of local control.